Stock analysis of 5G companies

The 5G sector and its specifics:

First, let's take a closer look at the 5G industry and its activities. What is 5G?

The term 5G is an acronym for a wireless data transmission technology, where the G stands for "generations". So 5G is the fifth generation of wireless technology. The data transmission here uses frequencies. The higher the frequency, the more data can be transmitted at the same time. Thus, if the current 4G allows the use of frequencies of several gigahertz, 5G will allow the use of up to 30,000 or more. The 5G indeed makes us enter the field of millimeter waves, that is to say waves whose length is one millimeter and which are much smaller than those of the previous generations of wireless technologies.

5G should therefore change many things in our daily lives, first of all with much faster data rates and therefore less latency, i.e. less delay between the request and the response.

But it is especially in the context of the Internet of Things that the 5th generation of wireless technology will enable developments. The internet of connected objects or IoT is indeed one of the promises of 5G. Among the connected objects that we already know today are watches, GPS systems, home equipment, home automation and many other objects that can communicate with each other or with servers.

The concept of IoT is also closely linked to that of Big Data, which is the concept of data produced by these connected devices. As the number of connected objects increases, so does the amount of data to be stored. In order for each connected object to have an address, it was also necessary to transform the Internet's addressing plan.

The previous Internet addressing system was IPv4. But this system has recently been replaced by the IPv6 system, which allows the creation of a much larger number of IP addresses and thus meets this new need. The total number of possible IP addresses with this new system is equivalent to 2 to the power of 128, i.e. a number with 38 zeros, which means that there are several million billion possible connected objects on Earth.

These details are important to know in order to understand which companies can be invested in the stock market in the field of 5G.

The different areas of stock market investment in 5G:

If you want to invest in the 5G stock market, there are many listed companies to choose from. We'd like to take a look at the different industries that will be involved in 5G in some way.

First of all, companies operating in the field of GSM infrastructure are of course in the forefront, as they are in charge of installing the infrastructure needed for the 5G network. Indeed, 5G will require many more antennas than previous versions. The choice of manufacturers to go wireless with 5G instead of fiber optics, which brings the same benefits, is purely economic since 5G infrastructures are less expensive than the installation of a fiber optic network.

Another category of companies involved in 5G are the manufacturers of GSM antennas. These include companies in charge of the production of silicon chips and integrated circuits. In the same way, we find in this sector the real estate companies which are in charge of the management of the sites of these GSM antennas. These real estate companies are REITs that specialise in locations for GSM antennas.

Another sector that will be at the heart of 5G is autonomous vehicles. Indeed, many companies are already working on the development of autonomous vehicles, capable of travelling alone and without a driver. Although these vehicles are currently limited to areas where there is little information, the development of 5G could make it possible to create smart connected cities that would be driven by autonomous vehicles.

This brings us to the last segment that should be part of the development of 5G and allow investments in the stock market. Indeed, as we have seen, 5G will make it possible to create smart cities with connected energy or water supply networks and many other applications from which certain urban planning, building and construction companies could also benefit, as could certain equipment manufacturers.

How do you perform a 5G stock analysis?

To finish this article dedicated to the stock exchange investment in the 5G, it is possible to be interested in the way of carrying out analyses of these values according to their specificities. The technical analysis here will be the same as for any other stock, taking into account however the volatility that the novelty of this technology could cause on the markets.

But as far as fundamental analysis is concerned, some very specific elements can be added to the elements usually studied for other types of stocks in the stock market and here are some concrete examples:

• First of all, we must take into account the high investments required initially for the implementation of 5G, which will weigh on the accounts of the companies concerned well before producing any profitability.
• The progress of the installation of 5G infrastructure around the world and the speed at which this network is deployed will need to be carefully monitored.
• Of course, 5G is also a technology pointed out by many associations and scientific committees regarding its potential danger for humans and animal species. We do not yet know the side effects of these waves and it will be necessary to monitor this point when the technology is launched.
• We will also keep an eye on governmental and regional decisions regarding the installation of the network and antennas in certain areas, which may cause controversy or delays for this industry.
• Finally, as this is a new and growing sector, it will of course also be necessary to closely monitor the arrival of new players in this field or the changes or diversifications of activities of technology companies towards this new segment with possible frequent changes in the distribution of market shares.

As 5G is a relatively new sector, it is still difficult to know exactly how it will develop and therefore how the shares of listed companies in this area will perform in the long term. For this reason, it will be important to analyse and keep abreast of all the news in this sector in the future, for example by subscribing to a targeted news feed and trying to understand the challenges of this technology and its technical and industrial specificities.

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